As charged in the First Cause of Action, Respondent converted customer funds for his own personal benefit. Instead of using the funds as the customers intended (to invest in a portfolio of securities), Respondent had the funds deposited in his family-owned business and used the bulk of them to purchase a home. This misconduct violated FINRA Rules 2150(a) and 2010. For the conversion, Respondent is barred from associating with any FINRA member firm in any capacity. He is also ordered to pay to his customers $174,000 in restitution for their outstanding losses, plus pre-judgment interest, and to pay FINRA $300,000 in disgorgement of his remaining ill-gotten gains. Respondent is further ordered to pay costs.
The First Cause of Action also charged Respondent with securities fraud in willful violation of Section 10(b) of the Exchange Act, SEC Rule 10b-5, and FINRA Rule 2020. The Hearing Panel finds that Respondent committed securities fraud, as alleged, and that the violation is a separate, alternative basis for the sanctions imposed.
As alleged in the Second Cause of Action, Respondent used family-owned business entities to obtain the customers' funds. In so doing, he engaged in outside business activities for compensation without the requisite notice to his firm. This misconduct violated NASD Rule 3030 to the extent that it occurred prior to December 15, 2010, and violated FINRA Rules 3270 and 2010 to the extent that it occurred on or after that date. Respondent is separately barred from associating with any FINRA member firm in any capacity for the outside business activities violations.
This decision has been appealed or called for review. While the appeal or call for review is pending, the findings and sanctions imposed in this decision are subject to review and modification by FINRA or the SEC.
|View Decision||(PDF 205 KB)|